WASHINGTON -- The U.S. Labor Department said Friday, May 8, that the economy shed more than 20.5 million jobs in April, sending the unemployment rate to 14.7% — devastation unseen since the Great Depression.
The report underscores the speed and depth of the labor market’s collapse as the coronavirus pandemic took a devastating toll. In February, the unemployment rate was 3.5%, a half-century low. And even since the survey was taken, millions of people have filed claims for jobless benefits.
The April job losses alone far exceeded the 8.7 million in the last recession, when unemployment peaked at 10% in October 2009. The only comparable period came when the rate reached about 25% in 1933, before the government began publishing official statistics.
If anything, the report understates the damage. The government’s definition of unemployment typically requires people to be actively looking for work. And the unemployment rate doesn’t reflect the millions still working who have had their hours slashed or their pay cut.
Many of the unemployed said they had been temporarily laid off and expected to return to their jobs. But the joblessness that began with layoffs in the leisure and hospitality industry has extended throughout the economy, from manufacturing and retail industries to white-collar redoubts like business services, meaning it will take longer for the labor market to recover.
The unemployment rate for black workers jumped to 16.7%, nearly 3 times its level in February — before coronavirus shutdowns took hold — and the highest since early 2010.
For Hispanic or Latino workers, the unemployment rate jumped to 18.9%, up from 6% in March and the highest on records going back to the 1970s.
The number is striking because gains among minorities, and black workers in particular, had been a major bright spot in the record-long expansion that preceded America’s coronavirus lockdown. The group’s record-low jobless rate had become a major talking point for President Donald Trump and key Federal Reserve officials.
“We were hearing from a minority low and moderate income and minority communities that this was the best labor market they’d seen in their lifetime,” Jerome H. Powell, the Fed chairman, said at his April 29 news conference. “It is heartbreaking, frankly to see that all threatened now.”
As tens of millions of Americans lost their jobs in April, 78.3% of them classified their separation as a temporary layoff, while 11.1% said their situation was permanent.
That is an unusually high share of people on temporary layoffs, and it could be good news for the economy. Temporary layoffs accounted for just 26.5% of job losses in March and 13.8% in February. In fact, the share was at an all-time high in records dating back to the 1960s.
Short-term job losses suggest that hiring may come back quickly when businesses reopen. According to Goldman Sachs, recessions over the past half century with a higher share of temporary layoffs have been followed by faster job recoveries.
A higher temporary share “would increase the scope for a more rapid labor market recovery when the economy eventually rebounds,” Goldman Sachs wrote, ahead of Friday’s jobs report.
But there’s an important caveat: Temporary layoffs can always become permanent later, if the economic situation worsens.